AM Best Downgrades Credit Ratings of Mennonite Mutual Insurance Company
August 14 2024 - 6:25PM
Business Wire
AM Best has downgraded the Financial Strength Rating to
B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit
Rating to “bbb+” (Good) from “a-” (Excellent) of Mennonite Mutual
Insurance Company (MMIC) (Orrville, OH). The outlook of these
Credit Ratings (ratings) has been revised to stable from
negative.
The ratings reflect MMIC’s balance sheet strength, which AM Best
assesses as very strong, as well as its adequate operating
performance, limited business profile and appropriate enterprise
risk management (ERM).
The downgrading of the ratings reflects the volatility in
operating performance in recent years. Results have primarily been
influenced by escalation in losses driven by an increase in
frequency and severity in weather events coupled with inflationary
and supply chain pressures. While fire losses returned to normal
frequency after a spike in 2022, catastrophe losses continued to
rise in both frequency and severity over the last two plus years.
While MMIC has reported mounting underwriting losses, pre-tax
losses have only been reported in 2023. Although there has been an
improvement in results through the current year, results remain
elevated; however, this is typical as MMIC’s results reflect a
cyclical nature regarding its operating metrics. The first half of
the year is considered to be a storm season with results showing
improvements by the end of the year. Ultimately, the deterioration
in more recent years has skewed the company’s five-year average
operating return measures, as it turned negative and lagged the
commercial property and personal property composites. Additionally,
volatility in operating performance has led MMIC’s operating
performance to underperform companies that have a strong operating
performance assessment. Management has implemented significant
initiatives inclusive of rate increases to offset higher loss costs
and ongoing underwriting actions to drive more refined risk
selection and improve weather resilience.
The ratings reflect MMIC’s balance sheet strength, which AM Best
assesses as very strong. The business profile assessment reflects
the company’s limited geographic spread of risk in two states,
although business is split between commercial and personal
properties. MMIC’s ERM practices remain appropriate and in line
with its risk profile and foster a strong risk management culture
with a focus on catastrophe management and rate adequacy.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Josie Novak Financial Analyst +1 908 882 2207
josie.novak@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Brian O’Larte Director +1 908 882 2212
brian.olarte@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com